Notice that the ARM product being offered is a 5-5 ARM. We don’t see that product that often. Recall that a 5-5 ARM means the rate is fixed (in this case the ad shows an interest rate “as low as 2.75%) for the initial five year period and then the rate will adjust only once every five years. This differs from 5-1 ARMs where the rate can adjust once every 12 months. The index is a 5 year CMT.
Click on the ad to get a closer view of the detail. We like the way the ARM payment changes are disclosed but the font size is a bit small to manage with ease. Notice that the ad also discusses rates and payments on a 30 year product though no real offer was made on a fixed rate loan in the ad. It’s a very thorough disclosure of Reg Z required disclosures but may be a bit more than what is needed which forced the lender to use a smaller font size.